Copper Is Testing Its Floor: Can Buyers Defend 6.5 as the Fed and Chile Collide?

Fed Hike Fears and Chile Relief Put Copper’s Range to the Test

Copper has now fallen three days in a row, its longest losing streak since June. On Thursday, December Comex copper dropped as much as 1.2% to a session low of $6.5245 per pound, about 4.5% below the record settlement of $6.89 set on September 9. Two catalysts hit at the same time. US consumer prices for September accelerated at the fastest pace in five months, lifting the Bloomberg Dollar Index to its highest level since May 2025 and reviving talk of another Fed hike after the September increase to 3.75% to 4.00%. The next FOMC meeting is October 27 to 28. Higher rates cool demand and raise the cost of carrying inventory. In addition, South Korea’s Kospi fell almost 8% into a bear market as chip stocks sold off, which raised doubts about the AI spending boom that has supported the copper rally.

Supply worries also eased. Supervisors at BHP’s Escondida ratified a labor agreement on Wednesday, removing the strike threat at the world’s largest copper mine. However, workers at Antofagasta’s Centinela remain on strike, and Codelco’s El Teniente open pit is still shut after last week’s landslide. Antofagasta also guided 2027 output to 630,000 to 690,000 tonnes, below its original range of 650,000 to 700,000 tonnes.

Tariffs remain the swing factor. The Comex premium over the LME three-month price has narrowed to about $49 per tonne. Macquarie reads that as roughly 2% odds that a 15% US import duty arrives on schedule in January. The bank describes the setup as binary, where a decision against a tariff could send Comex prices sharply lower.

What the Market Has Done

• Since the start of the year, the market has been trending higher in a block step manner, shifting value higher with each consolidation block.
• Buyers were able to defend the yearly VWAP on retests, and the market has stayed above it.
• Moreover, there is a recurring pattern of a false break below the consolidation blocks, which lets the market check for liquidity before reclaiming back up into the blocks and sweeping up through it.
• The rising trendline since May shows buyers stepping up bids.
• After the market made ATHs, it has auctioned two-way between 6.8 (top of range) and 6.5 (Daily level 1 and bottom of range). As a result, consolidation block 3 has formed and value has been established higher.

What to Expect in the Coming Weeks

The key level is the 6.5 area (Daily level 1). Watch how the market responds there.

Neutral Scenario

• Expect the market to continue its two-way auction within consolidation block 3, between 6.5 and 6.8.
• A possible supporting condition for this scenario is a Fed that holds in October but keeps the door open to a December hike, while Chilean disruptions at Centinela and El Teniente offset softer demand sentiment.

Bullish Scenario

• If buyers break out of consolidation block 3 and accept above 6.8 (top of consolidation block 3), expect a move toward 7.0 to make new ATHs, and possibly beyond.
• A possible trigger is a Fed that holds on October 28 with a less hawkish tone, followed by softer October payrolls on November 6 or a cooler October CPI on November 10. Either would cool hike bets and weaken the dollar. 

Bearish Scenario

• If buyers fail to hold bids at 6.5, which is confluent with the rising trendline, expect a move toward 6.2 (Daily level 2).
• A possible trigger is a hawkish Fed signal at the October 27 to 28 meeting, or a hot October CPI on November 10, combined with the AI-linked equity selloff spreading further. A decision against the January import duty would add to the downside, because the Comex tariff premium would likely unwind. 

Conclusion

Technically, copper is still in a higher value structure, but it is now sitting near the bottom of consolidation block 3. The 6.5 area (Daily level 1) decides whether the false break and reclaim pattern repeats or the trendline gives way toward 6.2 (Daily level 2). On the macro side, the Fed, the dollar, AI sentiment, Chilean supply and the tariff decision are all pulling on the same level. Does the market defend 6.5 once more, or has the story changed? Watch the reaction at 6.5 and the Fed’s tone into October 28.

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Disclaimer:

This article is provided for informational and educational purposes only and does not constitute financial, investment, or trading advice. The analysis presented reflects the author’s market observations and opinions at the time of writing and is not a recommendation to buy or sell any futures contract, security, or financial instrument. Futures trading involves significant risk and is not suitable for all market participants. Losses may exceed initial margin deposits, and market conditions can change rapidly.

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